Big Whale: Australian Business Law

This essay will discuss the issues extracted from the case and give suggestions to Rosie and Frank. The analysis will be based on Australian Business Law and divided into two main parts for different characters in this case. Firstly, issues and recommendation relevant to Rosie will be explained.

The first main issue for Rosie is the University of Cheshire’s breach of their contract. The existence of the contract between Rosie and the University of Cheshire can be proved at first. Allan had sent Rosie a letter that ensured Rosie’s appointment of a lecturer in his university and attached her acceptance with the teaching arrangement. This letter also had an exclusion clause that stated the classes would be cancelled without enough enrolment.

However, the fact was sufficient students’ enrolments and the exclusion clause would not be applied. Rosie then knew the class list and prepared for these classes, her behaviour as an act of the letter‘s requirement can be the evidence of the contract. Like the case Empirnall Holdings Pty Ltd v Machon Paull Pty Ltd [1988] 14 NSWLR 523, Rosie’s conduct showed that their contract had been made. But Allan had told Rosie that she would not give lectures to his university before the semester started, he thought the contract would be terminated with the notice he sent. This behaviour was an anticipatory breach of their contract because the university would not carry out the contractual obligations to give the employment to Rosie before the deadline to fulfil its side of the contract. Anticipatory breach is that one party refuses his contractual obligations before completely performing these, the case fact suits this definition.

As a result, Rosie can seek remedies for breach of contract to protect her right. According to the common law remedy for breach of contract, the injured party has entitlements to sue or keep the contract continuing with the later claim for loss. From the case, Rosie could not perform the contract after the university’s cancellation. Therefore, the suggestion to Rosie is that she should sue the University of Cheshire for her damages. In the case, Rosie gave up a chance to be a consultant for an institute. Although there might be the economic loss from this abandonment, Rosie cannot sue the loss of this opportunity. The reason is the remoteness rule settled by Hadley v Baxendale [1854] EngR 296. According to the rule of remoteness, the losses must be caused by the breach of the contract. But the possible economic loss of that chance was caused by Rosie’s performance of the contract. Because the remoteness rule also supports that the special damages can be awarded when injured party tells another party the special event, the rule can be applied if Rosie had told Allan that she would have another opportunity to earn money. In fact, she did not tell Allan. Therefore, she cannot get the compensation for possible loss from the abandonment of the chance to be a consultant. However, she can claim the reliance damages for the breach. Because Allan was aware of her preparation and reputation, he also knew the value of her legal service. Hence, the remoteness rule cannot be applied for this contemplation of both parties. Rosie wasted her time and materials to prepare the lecture, the loss can be calculated by the cost of materials and the possible service earnings for these days. The reliance damages are required compensation for the incurred expenditure from the compliance of the defendant promise. Eventually, Rosie can sue the University of Cheshire’s breach of contract for reliance damages that can be calculated by the expenditure of her preparation.

The second main issue for Rosie is the unavailable seafood delivery from Little Nemo and its request for the payment of raw materials. In this case, Rosie ordered the seafood lunch from Little Nemo. Because she gave a clear description of the order and the seafood would be manufactured before the delivery, there was an unconditional contract for the sale of future goods in a deliverable state under the rule of passing property .Therefore, the property was passed to Rosie. As risk prima facie passes with property , the risk was also passed to Rosie when Little Nemo still took possession of these goods. Based on the second exception, the party with the possession of the goods should take good care of them. Hence, Little Nemo must carefully store the seafood but it did not. From the case, the colleague careless behaviour that caused a fire and the restaurant did not install necessary security equipment. That is Little Nemo’s fault that destroyed the seafood prepared for Rosie’s order. According to the first exception, if the delivery has been not available owing to the mistake made by either buyer or seller, the party who makes fault should be responsible for the risk of loss. Little Nemo should be liable for the unavailable delivery and any loss because the failure of delivery and loss might not happen if it took care. Rosie did not need to pay for the perished seafood, she can even ask Little Nemo to compensate her loss. Because this case has the similar situation with the case Allied Mills Ltd v Gwydir Valley Oilseeds Pty Ltd [1978] 2 NSWLR 26.In that case, the plaintiff claimed the loss to buy a replacement for defendant fault of delivery by applying the first exception. Rosie also had to order a seafood lunch from another caterer and paid more money for this order. Little Nemo should bear this economic loss of Rosie.

From another perspective, the operator or owner of Little Nemo should ask the careless employee rather than Rosie for recovery. This is a tort of negligence because the damages of this caterer were caused by its worker’s negligence to turn off the stove that led to a fire. According to the definition of standard of care , one general rule is the possibility that the damage would happen if the care were not taken. From this case, if there was not this negligence, the harm would not occur. The worker in this caterer also had the responsibility to take precautions to avoid fire accident. Because there was a duty of care, a breach of the duty of care and Little Nemo suffered the damages as a result, the operator or owner of Little Nemo had the right to sue for its employee’s negligence. Therefore, the careless worker should compensate the destroyed properties such as raw materials.

The third issue for Rosie is that all the caterers that she rang had cartel conduct. According to the definition of the cartels , they are parties which fix price, restrict outputs in the production or supply chain, and allocate customers, suppliers or territories, even rig bid. The parties aim to fix the price or allocate customers can be seen as cartel conduct. In the case, the caterers provided the same price and sales terms to Rosie, their purpose were obvious to control the price and service in this market. As cartel conduct is illegal, the CCA has the provisions to give the penalty to those parties who do cartel conduct. To an individual, he may obtain up to 10 years imprisonment or fine up to $340,000 . To a corporation, it may get $10million fine or 3 times the value of the benefit of the cartel conduct or 10% of annual turnover. Hence, Rosie can directly tell the carters she rang that they would face the fine and jail and they had better stop fixing price and sharing market. She can also tell this phenomenon to the government agency like ACCC that can regulate the carters’ operation.

The fourth issue for Rosie is that Big Whale made a false or misleading representation about its goods.

Under the ACL s 29, if a false or misleading representation is made by a business, this business may be sued for damage by anyone such as customers. The ACL prohibits the representation that is the false or misleading description of the “quality” of goods. “Quality” can refer to special features or the nature of goods. In this case, Big Whale advertised its seafood as “Product of Australia”, this advertisement was used to indicate that their raw materials were from Australia. However, with the result of the investigation, the frozen salmon they used were transported to Sydney. There was no evidence to prove its raw materials were originally from Australia. As a result, Big Whale made a misleading representation about the quality of its goods, this was a breach of the ACL. According to the remedies under the ACL, Rosie may ask the regulator to give Big Whale adverse publicity order to correct its advertisement and require compensation for its misleading

action.

The fifth issue for Rosie is that Big Whale enforced her to accept unfair contract terms.

Based on the standard to assess the contract terms, if a party of a standard form contract is forced by another party to accept or refuse the terms of this contract, these terms can be treated as unfair contract terms. From this case, Big Whale required Rosie to pay in advance with credit card. Additionally, she also asked to pay a surcharge to ensure the delivery on time. Rosie had no choice but to adopt these requests because she had to arrange the lunch in a hurry. But these requests damaged Rosie’s right to be treated fairly in trade. Because contract terms, in this case, caused an obvious imbalance in the parties’ rights and obligations under the contract , there is evidence of the unfair contract terms. Hence, the regulator ACCC can have a declaration of these unfair contract terms from the court and the party who utilise these terms was in breach of ACL. Consequently, Rosie can sue Big Whale for her right. According to the ACL, she can have a compensation order to acquire the refund of her

surcharge.

The six issue for Rosie is that the seafood provided by Big Whale caused food poisoning to seminar participants and Frank. Based on the consumer guarantee, the goods must be of acceptable quality. If an item is unsafe, it is not of acceptable quality. In this case, Big Whale supplied Rosie contaminated frozen salmon, these seafood were not appropriate for human consumption. This was a breach of consumer guarantee. According to the ACL, if a “major failure” of consumer guarantee exists, the consumer can refuse to accept the goods or select to gain the refund or an alternative of goods. From this case, Big Whale must be responsible for the poison seafood supply. Therefore, as a customer, Rosie had the right to ask the refund of her money even the seafood were consumed.

The final issue for Rosie is that the problem from the seminar participants and Frank who suffered food poisoning. This is a clear fact that they had physic damages caused by the food she bought. However, she may be sued for a tort of negligence. From the case, she was a person in charge of the research seminars that always supplied with lunches. This means one part of her work is to arrange the lunch for a seminar. Therefore, she had a duty of care to guarantee the safety of the provided food. According to general principles of duty of care, “a person is not negligent in failing to take precautions against the risk of harm unless, in the circumstance, a reasonable person in the person’s position would have taken those precautions.” In this case, she did not take any action to verify the seafood she bought were safe for human consumption. But she was a person who needed to be responsible for taking care of food quality in her position. Hence, there was a breach of the duty of care and damages caused by this breach. The seminar participants and Frank can sue her for her negligence.

The second main part will discuss the issues related to Frank and give available suggestions to him.

The main issue for Frank is that he suffered food poisoning and he should claim the compensation from some parties. Although Frank was not a buyer of the seafood, he still had the right to sue Big Whale. Firstly, Big Whale was in breach of the consumer guarantee of fitness for disclosed purpose. In this case, as a seafood carter, Big Whale was aware that the seafood it sold were for human consumption. The customers would rely on the skills and judgement of Big Whale that the seafood they cooked were fit for human consumption. Though Frank was not an actual buyer of Big Whale’s seafood, he was directly consumed the food. Hence, the consumer guarantee can be applied to him. Secondly, Big Whale was also in breach of the consumer guarantee that goods should be of acceptable quality. There were enough evidence to prove the seafood it sold were contaminated. Thirdly, according to the product liability under the ACL , the manufacturers or retailers who make products available to the public should hold the responsibility for damages caused by those products. Frank was ill because he ate the contaminated seafood. This seafood could be safety defective because Big Whale did not appropriate store them. Big Whale was liable for the damage to Frank. Because Frank was sent to a hospital for the cure and lost payment for another seminar for his sick, he could claim the compensation about his medical fees and the future economic loss. This situation was also similar to the case Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54, therefore, Big Whale should compensate Frank’s loss under the ACL. From another perspective, Frank may also sue Big Whale by altering to apply the tort of negligence. Because there was a duty of care that Big Whale should take care of the safety of its food. Then there was a breach of this duty and injuries to a third party (Frank was not the buyer) when the food was unsafe and caused food poisoning.

Frank can also sue Rosie and the University of Wonderland for his compensation. Rosie’s liability is explained in her final issue, she can be sued and compensate Frank. According to Employees Liability Act, “If an employee commits a tort for which his or her employer is also liable to indemnify in respect of liability incurred by the employee for the tort.” This is the vicarious liability of the employer. Rosie’s employer is the University of Wonderland, this university can be sued by applying this law.

Frank’s compensation will not merely include the medical fees and indemnity to his physic damages, this compensation must also include the payment for his future economic loss. Based on Civil Liability Act, “A court cannot make an award of damages for future economic loss unless the claimant first satisfies the court that the assumptions about future earning capacity or other events on which the award is to be based accord with the claimant’s most likely future circumstances but for the injury.” In this case, Frank lost the capacity to deliver the planned seminar that he would earn $5,000. The food poisoning prevented him from participating in this future circumstance. Hence, he can also sue for his future economic loss.

In a conclusion, Rosie and Frank can use different sections in Australian Business law system to protect their right.